The way insurance companies report their results can hide the true impact of tough market conditions, according to an underwriting expert.

In an analysis written for insuranceNEWS.com.au, Noel MacCarthy, Liberty International Underwriters’ Executive VP and Senior VP Casualty Asia-Pacific and CUO Global Casualty, warns these are “difficult times”.

“Prices are soft, competition is fierce, demand for the product is inelastic, claims costs are increasing, broker commissions are rising, expenses are under pressure and investment income is unreliable,” he writes.

He says financial year figures “appear to conflict with what we know of the current market cycle”, and many insurers seem to be performing well.

Reporting on a financial year basis can “mask a dip in profits” that would be immediately apparent if reporting on an accident year or underwriting year basis, he says.

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